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I’d buy and hold these 3 FTSE 100 dividend growth shares for life

In my opinion, one of the best dividend stocks in the FTSE 100 right now is pharmaceutical giant AstraZeneca (LSE: AZN).

A few years ago, it looked as if Astra was on the rocks. Patent expirations were weighing on earnings, and the company was struggling to find new treatments to fill its pipeline.

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However, over the past three or four years, management has wholly reinvigorated the group. A relentless focus on finding new pharmaceutical products is starting to pay off, and the company is expected to return to growth in 2019 after several years of falling earnings. 

At the end of July, Astra reported its fourth successive quarter of rising revenues with sales increasing 19% to $5.7bn. Most of this growth is from new treatments. 

Management expects five of these treatments to reach blockbuster status in 2019, which means they will generate more than $1bn. CEO Pascal Soriot has described this as a “remarkable” performance for the company. 

Dividend growth

Astra is already a dividend champion, but this earnings growth suggests shareholders are in line for even bigger distributions going forward.

At present, the stock yields 3.2%, and the payout is covered 1.3 times by earnings per share. Cover is expected to hit 1.6 next year as earnings expand further, and I would expect Astra to make the most of this and increase its distribution to investors further. 

Another FTSE 100 dividend stock that I think could be a great addition to your portfolio today is Coca-Cola HBC AG (LSE: CCH).

Global partner

This is one of Coca-Cola’s major bottling partners, and the agreement with the drinks company gives the business a virtually guaranteed income stream. 

As a result, I think the dividend outlook for this firm is bright. While the stock might not offer the highest yield around (it currently yields 2.2%) the distribution is covered 2.3 times by earnings per share. It also has an impressive track record of dividend growth. 

Coca-Cola’s earnings per share have grown at a compound annual rate of 14% over the past six years as the business has branched out into new markets and improved operational efficiency. 

Earnings growth has allowed management to increase the dividend by an average of 10% every year, and I expect this trend to continue, given Coca-Cola’s market-leading position and track record of improving profit margins.

Market leader

The final FTSE 100 dividend stock that I would buy and hold forever is data giant Experian (LSE: EXPN).

Experian manages data that helps businesses and organisations to lend and prevent fraud.

In the world of data, bigger is always better. The more data you have, the better the service. And when it comes to data gathering, Experian has been a leader in the field since 2006, giving the firm a tremendous edge over its competitors.

As Experian has capitalised on its market position to grow, the dividend has grown at a compound annual rate of 5.1% over the past six years. The yield stands at 1.6% right now, but it’s covered 2.2 times by earnings per share, which gives plenty of room for growth going forward. 

The one downside is Experian’s premium valuation. The stock is trading at a forward price-to-earnings of 27 right now, but I think this is a price worth paying for such a world-leading business. 

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended AstraZeneca and Experian. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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